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China and the WTO Asia Program,
Environmental Change & Security Project,
Project on America and the Global Economy
China and the WTO
Domestic Challenges and
International Pressures
Kent Hughes, Gang Lin, and Jennifer L. Turner
Asia Program,
Environmental Change & Security Project,
Project on America and the Global Economy
China and the WTO
Domestic Challenges and
International Pressures
Kent Hughes, Gang Lin, and Jennifer L. Turner
This publication was made possible by a Ford Foundation grant to the
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fellows, trustees, advisory groups, or any individuals or organizations that provide nancial support
to the Center. Executive Summary
1
Kent H. Hughes
Remarks by Jeffrey Bader,
6
Assistant United States Trade Representative for China
on Chinas Accession to the WTO
Edited by Kent H. Hughes
State-Owned Enterprises under Siege
12
Gang Lin
(R)evolution of Rural China
16
Jennifer L. Turner and Sun Liang
Keeping an Eye on China
21
Kent H. Hughes
Appendix A:
China Joins the WTOImpact on Rural China
26
Appendix B:
Chinas Entry into the World Economy 19492002
29
CHINA AND THE WTO: DOMESTIC CHALLENGES & INTERNATIONAL PRESSURES
iii
Contents iv
W O O D R O W W I L S O N C E N T E R S P E C I A L R E P O R T
CHINA JOINS THE WTO
DOMESTIC CHALLENGES AND INTERNATIONAL PRESSURES
December 12, 2001
5th oor Conference Room
AGENDA
Time
Topic
Speaker(s)
11:30 12:30 pm
Lunch/Keynote Address
Jeffrey A. Bader
12:30 12:45 pm
Coffee Break
12:45 2:00 pm
State-Owned Enterprises
Dorothy J. Solinger
under Siege
Lawrence C. Reardon
Mark A. Groombridge
2:00 2:15 pm
Coffee Break
2:15 3:30 pm
WTO and the (r)evolution Qiren Zhou
of Rural China
Baoqing Zhao
Marilyn Beach
3:30 3:45 pm
Coffee Break
3:45 5:00 pm
Keeping an American Eye C. Richard D Amato
on China
Calman J. Cohen
Peter B. Hale
Conference Agenda O
n December 11, 2001, China became a formal member of the
World Trade Organization (WTO). By joining the WTO, China
took a major step towards economic integration with the world
economy. In two decades, China has gone from the hermetic isolation of
the Mao era to become a major force in many global industries.
DECISIVE STEP IN CHINAS MODERNIZATION
WTO membership will accelerate the development of an open and glob-
ally competitive economy in China. In taking on WTO commitments,
Chinas leaders opted to develop a strong economy that would be much
more closely woven into the global trading system.
SIGNIFICANT OPENING FOR TRADE, SERVICES, AND
INVESTMENT
Chinese WTO commitments include signicantly cutting tariffs in man-
ufactured goods, opening many services to various degrees of foreign
investment, and following WTO codes on intellectual property and
investment.
CHALLENGE FOR STATE-OWNED ENTERPRISES
Greater global competition will force Chinas inefficient state-owned
enterprises to add to the millions of workers left unemployed by previous
reforms. Global competition will force China to merge, privatize, or close
75,000 inefcient state-owned enterprises. China faces a key problem in
adjusting to change while creating enough new jobs for displaced industri-
al and rural workers.
TRANSFORMATION AND OPPORTUNITY IN RURAL CHINA
China is sharply reducing (to an average of 14 percent) the agricultural tar-
iffs of most interest to the United States. Increased imports of grains will
displace Chinese farmers but also will open up opportunities to shift to
higher value added crops such as fruits and vegetables. To turn challenge
into opportunity, the Chinese government will have to create secure land
CHINA AND THE WTO: DOMESTIC CHALLENGES & INTERNATIONAL PRESSURES
1
Executive Summary
Kent H. Hughes
Project on America and the Global Economy tenure and complement individual effort with key investments in infra-
structure.
MONITORING AND SUPPORTING WTO COMPLIANCE
The WTO, the U.S. government, and the private sector will be monitor-
ing Chinas compliance with its WTO obligations. There will be an effort
by all parties to help with compliance rather than an early resort to formal
dispute settlement by the WTO.
CHINA, U.S., AND THE FUTURE
With WTO membership, China will develop even closer ties with the
United States and other major industrial countries. The still unanswered
questions are whether closer economic ties will spill over into geopolitical
cooperation and greater progress on democracy and human rights.
2
W O O D R O W W I L S O N C E N T E R S P E C I A L R E P O R T O
n December 11, 2001, China became an ofcial member of the
World Trade Organization (WTO). Membership marked
another major step by the Chinese leadership towards deepen-
ing free market reforms. Over just 21 years, China has moved from the iso-
lation of the Mao Zedong era to become more outward looking and more
integrated with the global community.
Exports, global nance, and a growing reliance on markets were not the
early goals of the Chinese Communist Party. Since the Communists came
to power in China in 1949, the Chinese people have lived thro